What is a Hot Air Balloon? A hot air balloon consists of a bag called the envelope that is capable of containing heated air. Suspended beneath is a gondola orwicker basket (in some long-distance or high-altitude balloons, a capsule), which carries passengers and (usually) a source of heat, in most cases an open flame. How it works? The heated air inside the envelope makes it buoyant since it has a lower density than the relatively cold air outside the envelope. But hot air balloons, as with all aircrafts, cannot fly beyond the atmosphere.